MONROE, Mich. (


) -- Shares of

MBT Financial


sank Wednesday after its main subsidiary

Monroe Bank & Trust

was ordered by regulators to raise additional capital within 90 days.

The stock finished the session at $1.95, down 9.3%, on volume of roughly 89,000. Earlier in the day it got as low as $1.64. The closing price is a big comedown from an April 26 52-week high of $4.30, but the issue is still up 9% year-to-date.

Late Tuesday, MBT disclosed in an SEC filing that Monroe Bank has signed a consent order with Michigan regulators and the Federal Deposit Insurance Corp. "Consent order" is the FDIC's new term for "Cease and Desist Order," and in this case, Monroe Bank & Trust is required to increase its total risk-based capital ratio to 11% within 90- days of the order handed down Monday, and to 12% within 180 days.

June numbers aren't yet available, but the total risk-based capital ratio was 10.23% as of March 30 according to

SNL Financial

, just above the 10% required for most banks and thrifts to be considered

well capitalized

per regulatory guidelines.

The FDIC and Michigan's Office of Financial and Insurance Regulation increased Monroe's capital requirements based on an examination completed in October.

Monroe Bank & Trust had $1.4 billion in total assets as of March 31. The bank's nonperforming assets -- including loans past due 90 days or more, or in nonaccrual status (less government-guaranteed balances) and repossessed real estate, comprised 6.00% of total assets, compared to a ratio of "noncurrent loans and repossessed real estate" of 3.43% reported by the FDIC.

Monroe executives were unable to comment in time for this article

The order also requires the bank to charge-off any loans categorized as "loss" by bank examiners in October, that haven't already been charged-off. Along with the usual restrictions on paying dividends, a ban on making new loans to borrowers who already have caused loan losses to the bank, and submitting progress reports to regulators, the order requires Monroe to submit a profit and budget plan within 60 days.

On the holding company level, after five straight quarterly losses (mainly from elevated loan loss provisions) ate into capital, MBT Financial posted a first-quarter profit of $348,000, or 2 cents a share. However, the regulatory order's implication that loan loss provisions need to be increased, could push the holding company back into the red for the second quarter.

MBT Financial is scheduled to announce its second-quarter financial results after the market close on July 27.


Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.